The "working class" suburb of Karama earned the recognition in the Australian Property Investor Magazine's 'Hot 100' list, published in this month's edition.

The magazine's Shannon Molloy said its location - pitted in between several other high-value locations - makes it ripe for interest from investors.

Known well for its housing commission pockets and conspicuous graffiti, Karama is neighboured by the leafy family suburbs of Leanyer, Malak and Anula.

But on the southern and eastern sides of Leanyer, there is not much other than airport property, a waste depot and bare blocks lining roads leading to Darwin's industrial area.

On the upside, it is close to the popular Leanyer Water Park and is well placed for a fast route into the city centre.

"We're looking at the next hot spots across the country for future capital growth - Karama fits the bill as one of those cheaper spots in Darwin," Mr Molloy said.

"It has good potential for renovation and renewal, the houses are a little bigger and housing commission properties are slowly being sold and given a new lease on life."

House prices in Karama have increased by 4.5 per cent in recent months - only marginally less than the whole of Darwin city.

Mr Molloy expects the suburb will continue to grow in value with gentrification, population growth, infrastructure and transport links to the city.

"Southern investors have had their eye on Darwin for a while but they're looking for areas that are a little bit cheaper and have good potential, and I think price brings people to these sorts of areas," he said.

"It always surprises people when one of the less desirable suburbs is at the top of the list, but it's as simple as the surrounding suburbs being higher price and people making a decision that at some point in time it's going to become good value," he said.

"At some point in time those buyers looking around that area are going to say 'well hang on, Karama is $50,000 cheaper than the others surrounding', so it makes sense to buy there."

Mr Grantham said it is the same concept as "the worst house in the best street".

"At the end of the day it hasn't had the greatest reputation - historically there has been some bad publicity in that area, but...time goes by and areas get cleaned up and things change.

"Like in Redfern (in Sydney) - there's a vast difference to what is was a decade ago with the riots."